Russia sets monthly oil output record in August

Russian oil output hit a record monthly high in August, nearing 10 million barrels per day, as the world’s second-largest crude exporter launched a major new field in the Arctic and grabbed more market share from OPEC.

Russia produced 9.97 million barrels per day in August, up 0.6 percent from 9.91 million bpd in July and 1.5 percent higher than the 9.82 million bpd produced in August 2008. Natural gas production also recovered from its lows on improved demand.
There is a huge amount of frustration within OPEC that Russia has taken advantage of OPEC’s cuts over the last year and has gained market share,” said Chris Weafer, chief strategist at UralSib investment bank.

Russian oil output has recovered in 2009 after it fell last year for the first time in a decade. After flirting with OPEC when a barrel of oil cost less than $40, Moscow has set a course on raising production to bolster its recession-hit economy.

State-run Rosneft (ROSN.MM), the country’s biggest oil firm, this month launched its Vankor oilfield in the Arctic, which is destined to become a major supplier to China. [ID:nLL714287]

Energy Ministry data showed Rosneft’s oil output in August rose to 2.39 million barrels per day (bpd), a 5.5 percent, or 123,700 bpd, increase on July production.

Vankor will supply Rosneft with 25.5 million tonnes, or 510,000 bpd, when it reaches peak production in 2014. This is equivalent to nearly one-quarter of the firm’s output last year.

Analysts expect rising monthly production to extend into a small full-year increase, although output will stagnate over the next few years due to a lack of investment in new fields and limited export capacity.

“Big fields take 10 years to develop,” said Russian oil analyst Oswald Clint at Sanford Bernstein in London.

“Vankor say they will do 250,000 bpd next year, but unless you’re bringing on very sizeable fields every year, the 5 percent decline rate in Western Siberia will take that out.”

Reuters